High Purity Alumina an Important Material in Clean Technologies
High purity alumina (HPA) has purity >99.99% and finds applications in the high growth industries such as electronics, automotive and energy. In 2018, demand for high purity alumina was projected to reach more than 30,000 ton per annum with 4N (99.99%) contributing to the majority of the portion. 4N HPA is prominently consumed in LED applications as well as in lithium ion battery separators. In the past few years, demand for high performance grades has increased compared to low cost grades with significant demand from electric vehicles and energy storage market.
It is estimated that over the next few years the demand for 5N and 6N high purity alumina is expected to exhibit staggering growth. 5N HPA has improved scratch resistance and hardness properties as well as chemical stability making it suitable for sapphire manufacturing. Sapphire displays have better scratch resistance and durability as compared to displays in the market. With its high thermal stability and polishing performance, 6N HPA is also expected to project high growth rates especially in aerospace & defense, healthcare and electronics industry.
Global production and consumption of high purity alumina is highly concentrated in Asia Pacific region. China is the most prolific producer and consumer of high purity alumina in Asia Pacific region. China is the world’s largest production hub for LED epi wafer and have strong foothold in LED lighting for automotive, general and display applications. Europe and North America is also expected to provide ample growth opportunities due to rise in electric vehicles market.
Upsurge in the use of lithium-ion batteries is likely to escalate growth of high purity alumina especially in energy storage and electric vehicles market. Europe aspires to become leading market for lithium ion batteries and the market is expected to grow tenfold over the next 5-7 years. Furthermore, EU has taken initiatives such “Battery 2030+” in order to develop future battery technologies and strengthen value chain in the field of energy storage.
High Purity Alumina has Become Critical Component in Li-Ion Battery Revolution
There is drastic shift in electrification of transport and electric vehicles are gaining high market penetration rates due to green initiatives by EU, China and U.S. Battery separators/electrodes are key to the performance and safety of high temperature electric vehicle batteries. Companies are investing largely in Li-Ion batteries with more than 50 mega factories under construction to meet the growing demand for Li-Ion batteries. High purity alumina is precursor to ceramic coated Li-Ion battery separators. Currently, more than 60% of coated battery separators used in the industry consume high purity alumina and number is expected to reach beyond 80% by the end of 2030. High purity alumina improves battery life cycle and reduces self-discharge along with better thermal stability.
Traditionally, LED lighting has been the key driving factor behind the growth of high purity alumina across the globe. LED production is expected to grow with CAGR of 10%-12% in the next 5-7 years. LED uses less energy compared to incandescent (75% less energy consumption) and fluorescent lights (40% less energy consumption). LED technology is highly energy efficient compared to other commercial lighting technologies. Countries/regions such as Japan, South Korea, U.S., China, India and EU are promoting the usage of LED lighting. More than 85% of the total LEDs in the market use sapphire substrate produced with the help of high purity alumina. There is significant demand for better quality high purity alumina (4N+ grades) from LED manufacturers, thus sustaining the market growth.
High Operating Costs and Cost Competitive Substitute Threat
Manufacturing of high purity alumina is a very energy and capital intensive process. Furthermore, majority of the producers use common process (hydrolysis of aluminum alkoxide) that uses expensive feedstock such as aluminum metal. Manufacturing processes that are currently implemented have high operating and capital expenditures. These processes also have environmental implications with restrictive overlay of government regulations.
Furthermore, there is a moderate threat of substitution for high purity alumina in LED market due to increasing usage of silicon carbide and silicon substrates. Although there is no major substitute for high purity alumina in the production of synthetic sapphire, but aforementioned products are cost competitive and makes a very tempting substitute. Few of manufacturers in the Li-Ion battery market have opted to go for cost competitive products such as boehmite as a coating material. However, research shows that sodium leaching was occurred with boehmite coating which can create dendrites, thus compromising safety of the battery.
Supply Concentrated in Asia Pacific Region
Asia Pacific has become the manufacturing hub of high purity alumina with more than 6 companies contributing to the two third of the world output. Companies such as Sumitomo, Hebei pengda, Zibo Xinfumeng, Nippon Light Metal and Bestry Technology are few of the leading manufacturers in the region. Recognized multinational companies operating in market have diverse business portfolios with high purity alumina being only a small part of it. On the other hand, China-based companies are more focused on high purity alumina as their main product and intends to meet the growing domestic demand. Strategic alliances have become key component in gaining competitive advantage in the market. In 2020, FYI Resources signed a MoU with Alcoa for developing superior quality high purity alumina. This memorandum will help the companies to enhance its current capacities and technical know-how.